Next Victim Of Ad Recession: Ad Employees

Not everyone agrees about the severity of the ad slowdown (GE, for instance, is still holding out hope that NBC's national ad business won't crater like its local revenues have). But Madison Avenue isn't waiting around to find out: It's already cutting staff in anticipation of bad times. WSJ:

Starcom MediaVest, a media-buying giant owned by Publicis Groupe, said last week that it is slashing about 150 jobs by year end, partly in a restructuring of its business with General Motors.

Landor, a branding firm owned by WPP Group, laid off about 10 employees from its London office.

TBWA/Chiat/Day, a unit of Omnicom Group, last week dismissed 20 employees from its New York office, about 6% of its work force. A spokesman described the move as "restructuring the agency, bringing its resources in line with current demands of our clients and our business."

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Forecasters are divided on the outlook for 2009 ad dollars, with some predicting flat growth from this year, and others predicting a decline of 1%. Late last week, John Janedis, an analyst at Wachovia, lowered his forecast, saying he now expects ad spending to fall 0.8% next year. He cited "continued deterioration in the economy, and our belief that things may get worse before getting better." Mr. Janedis previously expected spending to rise 1.5%.

One thing seems nearly certain, however: more job cuts. Brand Union, a branding firm owned by WPP, is expected to make layoffs in coming weeks, according to people familiar with the matter. Branding firms typically are among the first to be hurt by economic woes because they usually work on a project-by-project basis, while ad agencies generally have longer-term relations with their clients, ad executives say. "It is an easy area to chop," says Dean Crutchfield, a branding expert who most recently worked for Omnicom's Wolff-Olins.

Agency executives say the soft economy will force many firms to cut jobs more quickly in response to client losses because new business is less likely to materialize in a downturn. Last week, Interpublic Group's Lowe London cut its payroll by about 10 employees, and Wieden + Kennedy's hometown office in Portland, Ore., laid off six staffers. Both cuts were related to client departures.